Saudi firms lead MENA IPO charge amid global gloom

Reuters/Ahmed Yosri

• Saudi listings in Q1 raised $3.9 billion in proceeds
• Abu Dhabi’s main index saw 17 percent increase
• Qatar Exchange General Index rose by 16.5 percent

Initial public offering (IPO) activity in the Middle East and North Africa (MENA) is bucking global trends, with investors rushing to take opportunities across a wide range of sectors.

Despite uncertainties affecting the global IPO outlook – including the ongoing Russia-Ukraine conflict – the MENA region saw a 400 percent year-on-year increase in the number of companies listing.

A total of 15 IPOs raised proceeds of $4 billion in the first quarter of 2022. According to multinational professional services network EY, the figure of 15 listings compares to three IPOs in Q1 2021. 

In contrast, global IPO volumes fell 37 percent during Q1, with proceeds down by 51 percent year-on-year. 

EY said strong IPO pipelines in Saudi Arabia and the United Arab Emirates are expected to result in another record-setting year for MENA IPO markets this year.

 The region is moving through a period of strong investor confidence

Gregory Hughes, MENA IPO and transaction diligence leader at EY

“It is clear that with an unprecedented surge in issuances in Q1, MENA IPO activity is delivering new opportunities for investors and bucking the global trend,” Brad Watson, EY MENA strategy and transactions leader, said.

“The breadth of industry sectors that have been listed also reflects a more widespread return to strong economic growth across the region, with IPOs in consumer cyclicals, technology, basic materials, healthcare and the energy sector. 

“Saudi Arabia is currently the dominant player, but with regionwide activity that is bucking the global trend, we anticipate continued IPO activity across the entire region as 2022 progresses.”

Saudi Arabia

Saudi dominated listings activity in Q1 with six IPOs on Tadawul’s Main Market and seven IPOs on the Nomu-Parallel Market, raising $3.9 billion in proceeds. 

The Nomu market offers lighter listing requirements, serving as an alternative platform for companies to go public, with investments restricted to qualified investors.

Within the GCC, the number of listings and their total value far exceeded that of previous years. In Q1 2020 the market saw only three listings with a combined value of $801 million, while Q1 last year also saw three listings, with a combined value of $295 million. 

In 2022, there were 14 listings across the GCC, which raised approximately $3.9 billion in proceeds.

Jahez International Company for Information System Technology completed its listing on the Tadawul and was the first listing in the MENA region for 2022, after raising $427 million on Nomu-Parallel Market.

The largest IPO during Q1 for the MENA region was also in Saudi, with Al Nahdi Medical Co raising $1.38 billion in the kingdom’s biggest IPO since Saudi Aramco’s listing in 2019.

UAE 

In the UAE, Abu Dhabi’s main index saw an increase of 17.2 percent during Q1. Separately, the Abu Dhabi Ports Company raised capital of $1.1 billion through a private placement before listing on the ADX.

According to EY data, MENA equity markets continued their strong performance during 2021 into 2022. The Bahrain bourse increased by 15.3 percent in Q1, reflecting a “strong return to trading and a fast-growing investor appetite”. This growth was mirrored in Kuwait, where the Boursa Kuwait Premier Market Index increased by 18 percent in Q1.

Oman, Qatar and Egypt

Oman also saw a welcome return to IPO activity in Q1 this year, with the Barka Desalination Co raising $11.4 million and completing its listing on the Muscat Stock Exchange (MSX). Overall, the MSX saw a slight increase of 1.8 percent during Q1. 

Elsewhere in the GCC, the Qatar Exchange General Index in Doha rose by 16.5 percent during Q1.

Further afield, the Egyptian Exchange (EGX) saw the listing of the previously postponed IPO of Macro Group Pharmaceuticals, having raised $82.7 million while The Nahr Al-Khair Company for Investment and Agricultural Development also completed its direct listing during Q1.

Gregory Hughes, EY MENA IPO and transaction diligence leader, said: “With such a strong start to IPOs and trading activity across many of the Middle East’s exchanges in Q1, we can be confident that the region is moving through a period of strong investor confidence. 

“Within the GCC, Saudi Arabia in particular is presenting investors with a great variety of opportunities across multiple industry sectors that bodes well for Saudi Arabia’s Vision 2030 for the development of a diverse non-oil economy. As we look ahead, Q2 is already off to a strong start with the DEWA IPO listing on the Dubai Financial Market, which was heavily oversubscribed. 

“This news is particularly welcome given the current context of global uncertainty, which led to a number of launches in other markets being postponed.”